Mexico’s Energy Reform establishes relevant regulatory and administrative changes with regard to environmental protection that may have a significant impact on the operations of private parties participating in the energy sector. Through the amendment of articles 25, 27, and 28 of the Mexican Constitution, the Decree opens up the possibility for private parties to participate in the Mexican energy sector, specifically in activities related to: (i) the generation and commercialization of electric energy and (ii) the exploration and extraction of oil and other hydrocarbons.1

As a result, both the Federal Electricity Commission (Comisión Federal de Electricidad or “CFE”) and Petróleos Mexicanos (“PEMEX”) transform from decentralized operations to productive state companies whose objective is “creating economic value and increasing the Nation’s income,” activities that now will have to be done in cooperation with other public and private companies. In that respect, the Energy Reform contains significant environmental elements to be developed within the next months with potential impact for the private sector, which are generally described below.

On an arid plain where sudden gusts of wind can rip roofs off buildings and knock over tractor trailers, Mexico is building a new engine for its energy future. Surrounded by towering turbines in every direction, the town of La Ventosa – which means “the windy place” in Spanish – is at the heart of a wind power boom in the country.

Mexico, the world’s 14th biggest economy, still punches well below its weight in terms of wind energy, ranking 24th on the planet in installed capacity last year, according to the Global Wind Energy Council (GWEC). But the market is growing fast. By the end of this year, the national wind energy association expects Mexico to jump to number 20 on the list, which is dominated by wealthy European nations, the United States, China and India.

“We’re talking about the largest growth in wind power projects anywhere in the world,” President Felipe Calderon said recently near La Ventosa at the opening of Latin America’s largest wind park owned by Spanish company Acciona SA, a long row of turbines whirring behind him.

Danish wind turbine maker Vestas has won an order in Mexico for turbines with a total capacity of 396 megawatts (MW), which will be installed at the biggest wind power project in Latin America, the company said on Monday.

The order for the turbines, which will generate power for beer and Coca-Cola bottling in Mexico, lifted Vestas’s year-to-date announced orders to 865 MW, the company said on Monday. Vestas does not disclose the value of orders, but turbines usually cost around 1 million euros ($1.31 million) per megawatt of capacity.

Vestas Wind Systems A/S said in a statement the order for 132 of its V90-3.0 MW turbines was from the Marena Renovables project, a consortium of Macquarie Mexican Infrastructure Fund, Japanese conglomerate Mitsubishi Corporation and Dutch pension group PGGM.

Mexico should turn to nuclear power to reach renewable energy goals and could “easily” build two more reactors at its Laguna Verde plant, Energy Minister Jordy Herrera said.

“It’s time to put nuclear power on the table,” Herrera said during an event in Mexico City today. The ministry is recommending expanding nuclear capacity as part of its strategic energy plan through 2026. Mexico, one of three Latin American nations that use nuclear power, has delayed for over three years a decision on building nuclear plants as lower natural-gas prices make the energy source less attractive.

The country operates a 1,360-megawatt nuclear plant in Laguna Verde, Veracruz state. In an interview Nov. 1, Herrera said Mexico’s rising gas reserves made the fossil fuel a cost- effective option over nuclear power.